Nigeria’s economic landscape over the past week has been shaped by the lingering effects of a global energy shock, renewed inflationary pressures, and mixed performances across key financial markets, highlighting both the country’s resilience and its vulnerabilities in an increasingly uncertain global environment.
https://www.digital.zenithbank.com/ZEQ/ZEQ-jan-2026/index.html#p=1On the production front, Nigeria recorded a modest but encouraging improvement in crude oil output, rising to 1.383 million barrels per day in March 2026 from 1.314 million barrels per day in February. This increase offers some relief in terms of revenue generation, particularly at a time when global oil prices remain volatile. However, persistent challenges surrounding crude supply obligations to domestic refineries and continued reliance on imported refined petroleum products have sustained pressure on domestic fuel prices. As a result, pump prices at independent stations have remained elevated, hovering above ₦1,300 per litre, thereby intensifying cost pressures across the economy.
These developments are unfolding against the backdrop of heightened geopolitical tensions in the Middle East, particularly around the Strait of Hormuz, which have significantly influenced global oil prices. The resulting external shock has had direct implications for Nigeria’s inflation trajectory, contributing to an increase in headline inflation to 15.38% in March 2026. This uptick effectively reverses the earlier disinflation trend and underscores the growing impact of global factors on domestic price stability. It also renders earlier projections by monetary authorities—such as the Central Bank of Nigeria’s forecast of a 12.94% average inflation rate for 2026—largely unattainable within the first quarter of the year.
With the Monetary Policy Committee meeting approaching, the Central Bank faces a complex policy dilemma. Balancing a high Monetary Policy Rate of 26.5% against renewed inflationary pressures requires careful calibration, particularly as the drivers of inflation are increasingly external and structural rather than demand-driven.
In the money market, system liquidity declined over the course of the week, falling from ₦4.97 trillion at the start of trading to ₦3.85 trillion by the close. Despite this contraction, short-term rates remained relatively stable, with the Open Buy Back rate holding at 22.00% and the Overnight rate easing slightly to 22.35%. This suggests a relatively balanced liquidity environment, although pressures remain evident.
The Treasury Bills market maintained a cautious but positive tone, with initial demand focused on newly issued instruments. However, a significant mid-week Open Market Operations auction by the Central Bank—where ₦600 billion was offered but ₦2.17 trillion was ultimately allotted—signaled an aggressive liquidity tightening stance. Following the release of the latest inflation data, market activity slowed, and yields remained relatively stable, closing the week at an average benchmark of 17.47%.
Similarly, the Federal Government bond market reflected a wait-and-see posture among investors. Trading was largely subdued, with limited activity and marginal yield movements as market participants assessed the implications of rising inflation and future supply signals. The average benchmark yield closed the week unchanged at 15.59%, indicating cautious sentiment.
In the Eurobond market, volatility was pronounced, driven largely by geopolitical developments and global macroeconomic signals. The week opened on a bearish note following the collapse of high-level diplomatic talks, which triggered a surge in oil prices above $100 per barrel and led to a selloff in emerging market assets. Subsequent developments, including conflicting signals around the status of the Strait of Hormuz, contributed to sharp market swings. Despite this volatility, Nigeria’s Eurobond yields declined by 17 basis points week-on-week to close at 6.92%, reflecting intermittent investor demand.
In the foreign exchange market, the naira recorded a modest appreciation, gaining 1.2% week-on-week to close at ₦1,343.63 per dollar at the official market window. This performance suggests some level of stability, although underlying pressures remain tied to external factors and foreign exchange supply dynamics.
The equities market delivered a strong performance, with the benchmark All-Share Index rising by 2.49% to close at 217,167.6 points, while market capitalisation increased to ₦139.8 trillion. Weekly gains were even more pronounced, with the index advancing by 6.57%, driven by strong rallies in key stocks across sectors. Year-to-date, the market has posted an impressive return of 39.56%, reflecting sustained investor confidence and robust participation despite macroeconomic headwinds.
Overall, Nigeria’s economic outlook remains delicately balanced. While improvements in oil production and positive equity market performance provide some optimism, persistent inflationary pressures, elevated energy costs, and global uncertainties continue to pose significant risks. The International Monetary Fund’s recent caution regarding the vulnerability of commodity-importing emerging markets serves as a timely reminder that Nigeria’s resilience, though evident, is not without limits.
As the country navigates this complex environment, policy responses will need to carefully balance stability and growth, with a clear focus on addressing structural challenges while mitigating the impact of external shocks on the domestic economy.
